Following the retirement of Davey Johnson the Washington Nationals named Williams their new manager for the 2014 season. His first year was quite successful, as the Nationals finished the year with the best record in the National League, but they made an early exit from the postseason when their bats went completely quiet in the NLDS, which they lost in four games to the San Francisco Giants. Williams was criticized quite a bit for the use of his bullpen in the series, after he unexpectedly removed Jordan Zimmermann with two outs in the 9th inning in Game 2 and Drew Storen blew the lead, and then when he had bullpen back-enders Matt Thornton and Aaron Barrett give up the series-winning run in the 7th inning of Game 4 while his better relievers were sitting down. However, Washington entered 2015 as overwhelming favorites to repeat as NL East champions, after signing starter Max Scherzer as a free agent in the off-season. Scherzer did his part, pitching a pair of no-hitters, and OF Bryce Harper had a break-out season, but the Nationals collapsed in August and September, after trading deadline acquisition Jonathan Papelbon replaced Storen as the closer. The Nationals finished second, but missed the postseason by a wide margin and paid the price when he was fired, along with his entire coaching staff, on October 5th, the day after the season ended.

Williams returned to the Diamondbacks as third base coach in 2016 but stayed for only one season.